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Closing Comments

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Closing Comments

EIA petroleum inventory report was a little bearish. Crude inventories added another 2.8 mln this week, gasoline was 0.5 mln higher while distillates were 1.3 mln lower. Ethanol production fell slightly but inventories built and regional data shows likely staging at the Gulf for export. Ethanol traded lower on the bearish report.

Corn closed lower on the expectation of a return to planting progress on dryer Midwest weather. In Brazil, due to the hot/dry weather – analysts on average have lowered the expectation for their winter corn crop production by 5.4 percent with the worst states being Goias and Minas Gerais. FC Stone cut their estimate for the winter corn crop by 12 percent. Farmers in Brazil have reportedly forward marketed 65 percent of their production. Corn will need to confirm support this week in the 3.74-3.76 area in the July contract. The market will be watching tomorrow morning’s export report.

Soybeans higher on continued questions over South American crop supplies and rising expectations for export demand. FC Stone lowered its estimate for Brazil’s crop by 1 mln tonnes. European rapeseed prices higher on frost damage to Polish crop and insect damage in France and UK. Malaysian palm oil futures rose on short covering and lower ringgit helping the soy oil market. Early market weakness found buyers stepping back in to hold the July contract above the “speed trend line” and above the key price line of 10.18. The products of meal and oil will continue to give soybeans direction – the July board crush margin closed at its highest level since December.

Wheat closed incrementally higher but off daily highs as the oversold condition was tempered by the continued bearish fundamentals. The second day of the Wheat tour in Kansas had two routes reporting an average increase of 10 bpa vs last year on those routes. Yesterday’s summary of day one was 6.9 bpa above the previous year tour. Disease pressure was noted as light thanks to fungicide applications following recent rains. The KC-Chi spread is trying to carve a bottom and turn leadership over to KC which would be healthy considering the bearishness fundamentals – watch if KC can take over leadership for health to return.  

Cattle and feeders gained on technical buying and future’s discount to last week’s cash price. Last week cash cattle in the Plains sold at $124 per cwt. If wholesale demand improves soon, packers may be willing to pay steady money this week. Wholesale choice beef was up 2 cents while select fell 80 cents. Cattle traded an outside day for higher, a bullish sign and should bring technical buyers to the table tomorrow.

Hogs closed lower for the first time in six sessions on profit taking and future’s premium to the hog index at 71.77. This morning showed weak wholesale pork value and inconclusive cash prices. Wholesale pork price at $82.20 was down 37 cents per cwt.

Closing Market Snapshot

 

 

All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.

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